The authority’s chairman claimed the regulator was under political “pressure” not to be “heavy and intrusive” with banks such as HBOS and Northern Rock.
Instead, it was told to operate a “light touch” approach, which had now been proved to be “mistaken”, he told a Commons committee.
The failure of the regulator to intervene earlier has been blamed for the banking crisis, which has led to the near-collapse of several of the country’s biggest banks.
Lord Turner’s remarks, made to MPs, are deeply embarrassing for the Prime Minister, who oversaw the FSA while he was Chancellor.
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